To put it simply, you are a self-employed person if you work for yourself and are not employed as an employee. This article will tell you more about the meaning of self-employment and the tax obligations.
Am I a Self-Employed Person
If your income is derived from the buying and selling of goods, or from providing professional or personal services, you are considered as carrying on a trade, business or profession and a self-employed person.
A self-employed person may be a sole proprietor or a partner of a partnership business.
Tax Obligations of the Self-Employed
As a self-employed person, you are chargeable to profits tax on the assessable profits of your sole proprietorship or partnership business. You need to:
- keep sufficient business records for at least 7 years;
- prepare accounts based on your accounting records;
- complete and submit a tax return for reporting business profits or losses;
- notify the Inland Revenue Department (IRD) in writing about your liability to tax, not later than 4 months after the end of the basis period for the year of assessment concerned, unless you have already received the tax return from the Department;
- notify IRD about the cessation of your business within 1 month of cessation;
- notify IRD about your change of address within 1 month of the change; and
- pay the tax.
You can know more about the tax obligations of the self-employed through the following links:
- Notification of chargeability http://www.ird.gov.hk/eng/tax/noc.htm
- More on notification of change of postal address http://www.ird.gov.hk/eng/tax/ind_nca.htm
- A guide to keeping business records http://www.ird.gov.hk/eng/pdf/51c_pam.pdf
- Admissibility of business records kept in electronic form for tax purposes http://www.ird.gov.hk/eng/pdf/pam60e.pdf
- Business registration http://www.gov.hk/en/business/registration/businesscompany/
- Employers' tax obligations http://www.gov.hk/en/business/taxes/employer/
If you receive a tax return from IRD, you must complete and submit it in time even if your business had ceased, was inactive or operating in losses.
Last review date: March 2010
